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1DOI: 10.29141/2658-5081-2022-23-2-2 EDN: UQDFXM JEL classification: R10
Elena B. Dvoryadkina Ural State University of Economics, Ekaterinburg, Russia Elvin V. Dzhalilov Ural State University of Economics, Ekaterinburg, Russia
Natalia A. Istomina Ural State University of Economics, Ekaterinburg, Russia
Industrial municipalities in economic space of traditional industrial regions: A programme for research
Abstract. Behind the quality of economic space of traditional industrial regions, there are various factors at play, including the performance of municipalities, among which the impact of industrial municipalities is particularly noticeable. Most of the programmes presented in the Russian academic discourse and used to assess municipalities focus on revealing trends in their socioeconomic development. At the same time, regional economics lacks methodological approaches to assessing them in a spatial context. The research aims to develop an original method for analysing and evaluating the development of industrial municipalities in economic space of traditional industrial regions. Methodologically, the study rests on spatial and municipal economics, and the concept of functional complexity. The suggested programme for research consists of five blocks. The first four blocks include the assessment of the industrial municipalities' participation in ensuring the saturation of regional economic space, forming region's industrial potential and its municipal economic space, and processes of strengthening functional complexity of regional economic space. The fifth block includes the calculation and interpretation of composite indicators as well as building a typology of industrial municipalities. The practical significance of the developed programme for research is that it meets the need for the assessment of industrial municipalities as a system-forming element in the economic space of traditional industrial region.
Keywords: traditional industrial region; economic space; industrial potential; industrial municipality; method.
For citation: Dvoryadkina E. B., Dzhalilov E. V., Istomina N. A. (2022). Industrial municipalities in economic space of traditional industrial regions: A programme for research. Journal of New Economy, vol. 23, no. 2, pp. 29-44. DOI: 10.29141/2658-50812022-23-2-2. EDN: UQDFXM.
Article info: received January 24, 2022; received in revised form February 25, 2022; accepted March 10, 2022
Introduction
The efficient development of a municipality depends on a number of factors, primarily on the adoption of well-considered decisions by all actors located within its territory.
Some subjects of the Russian Federation have their own methods for assessing the development level of municipalities, as well as various options for their classification depending on the socioeconomic results. At the same time, a single method has not been found yet - the complexity of its choice is enhanced by the existence of various types of municipalities, as well as the incompleteness of the databases generated by municipal statistics.
Within the framework of various options for assessing the socioeconomic development of municipalities, a large amount of indicators is used. They have both common and specific features depending on the type of a municipality, the purpose, and the assessment methods.
The purpose of the study is to design a method to assess the contribution of industrial municipalities to the formation of economic space of a traditional industrial region, considering its typological features.
Achieving this purpose is based on a review of methods for analysing the socioeconomic development level of municipalities.
Review of programmes for research of municipalities' development assessment
Russian scientific publications present a large number of assessment methods of the municipalities' development. Conventionally, they can be divided into three groups:
• methods that evaluate territorial development;
• methods that evaluate the efficiency of local government bodies;
• methods that evaluate documents adopted by public authorities and local government relating to the socioeconomic development of these territories (strategies and municipal programmes).
Kazanskaya and Sinelnikov proposed a method for a comprehensive parameters assessment of urban municipalities' state. It provides for a joint analysis of the content characteristics of municipalities of a certain type and comparative characteristics of the parameters and socioeconomic status in a three-level system of indicators. The method makes it possible to justify the adoption of management decisions, which are to "identify priority areas for development" of a city by analysing the portfolio of its socioeconomic state that is being formed [Kazanskaya, Sinelnikov, 2012].
In an earlier work, Kazanskaya [2006] presented her method for a comprehensive assessment of the socioeconomic state of municipalities. It is based on the typology of
municipalities created by the researcher, which includes a description of the city type (it takes into account the relative level of development of a city in the region and at the same time the development level of a region in relation to other regions), as well as a comparative description of the socioeconomic development of a city by relative values of indicators creating a three-level system. This system contains a composite index, partial indicators and normalised indicators.
As a result of clustering, four basic types of cities are distinguished: leaders, average 'strong' and average 'weak' cities and outsiders. Thus, it is possible to compare both cities of the same region and cities of different regions belonging to the same type.
In this work, an assessment algorithm is also given, which begins with the preparatory stage: the main socioeconomic indicators of large cities are taken from the statistical collection of Rosstat of the Russian Federation "Regions of Russia", then the 'negative' indicators (mortality, unemployment, crime) are adjusted and the array of normalised values and values of partial indicators is calculated. Further, based on the latter, a composite index of the socioeconomic state of a city is calculated, which is used to analyse the quality of cluster solutions in the process of constructing a typology of large cities. As a result, for a comprehensive assessment, the content and comparative characteristics of the city are used in a three-level system of indicators.
We consider the authors typology to be an effective tool to overcome the difficulties associated with a large number of municipalities and the diversity of their features.
Yakovenko, Komov, Didenko, Safonova and Ten employed cluster analysis for assessment, which allows dividing municipalities into approximately similar groups [Yakovenko et al., 2018]. The essence of this approach is as follows: the sustainability of municipalities in terms of social and economic indicators is comprehensively assessed, after that integral coefficients are calculated, which reflect the four levels of development of municipalities. Depending on the data obtained, municipalities are included in one of five clusters: territories with a high level of development, slightly depressed, medium depressed, strongly depressed territories and outsider territories.
Antonyuk, Rezepin and Kremer also consider it essential to apply the method of hierarchical cluster analysis to classify municipalities by types of economic development. The clustering criteria are the average growth rate of the real volume of shipped goods of own production, works and services performed on their own; an indicator of accelerating the growth of the real volume of own production shipped products. Cluster analysis is supplemented by an assessment of the integral economic potential of municipalities, including the calculation of indicators of the basic resource, realised resource, infrastruc-tural and innovative potential [Antonyuk, Rezepin, Kremer, 2020].
Kizil proposes to assess the development level of a municipality using a rating method, the main component of which is the assessment of the financial and economic state
of the local budget [Kizil, 2013], based on the method of budgetary sustainability of Tishutina [2008]. This tool is designed to assess a region, but the author adapts it for the mentioned above purposes. The assessment is performed using nine indicators (they will be discussed below), each of them is calculated according to a specific formula and compared with the established tabular values (indicators). In accordance with the results of the comparison, the indicator is assigned a score from 1 to 2, after that a rating is done and it is determined in which zone (a critical zone, a dangerous zone, a zone of relative sustainability and a well-being zone) a municipality is located.
According to the Tishutina's method, four types of territories are characterised by scoring: a sustainable territory with stable development; developing territory; subsidised territory; a territory with crisis [Tishutina, 2008].
Chistopolskaya and Shcherban also explain the use of the integral rating assessment as a key method for constructing a rating of municipalities in terms of the level of socioeconomic development [Chistopolskaya, Shcherban, 2018].
According to Shevandrin [2012], it is possible to assess the development of a municipality considering its gross municipal product. The author defines the gross municipal product as "the value of all goods and services created in a municipality for a given period by residents minus the value of their intermediate consumption" [Shevandrin, 2012, p. 94]. In addition, indicators of the volume of agricultural production per capita are included in the assessment; investment in fixed assets per capita; volume of paid services per capita; retail trade turnover per capita; the share of profitable organisations as a percentage of the total number of organisations; the number of small and medium-sized enterprises per 10 thousand people; local budget revenues per capita.
According to the results of the study, the introduction of a macroeconomic assessment of the gross municipal product into management will allow determining the proportions of subregional economic development; rates of economic growth, its spatial and type analysis; the scale of the tax potential and the aggregate supply for individual administrative-territorial entities of the region under consideration, which will improve the quality of management.
Cheklaukova [2008] defines a complex indicator of socioeconomic development of a provincial town (CSED) which includes three integral indicators:
• the indicator of living conditions of the population, which consists of indicators of social stratification, social tension, social infrastructure, development of education and medicine;
• the indicator of business development, the indicators of which are the development of a large manufacturing sector, the sector of small and medium-sized businesses, the service sector and the urban economy;
• the indicator of growth potential, characterised by indicators of the labour force quality, investment and economic development opportunities.
Finding the CSED involves four stages:
1) partial indicators and weighting coefficients of indicators in partial indicators are distinguished by the method of expert assessments;
2) partial indicators I j are defined as the ratios sum of the primary indicators of the current and base year, multiplied by an appropriate weighting coefficients;
3) value of the composite indicator CI, is calculated as the sum of the products of the corresponding indicators and weighting coefficients;
4) CSED values are determined by summing the products of the obtained values of composite indicators and their weighting coefficients.
As the researcher notes, this method allows determining not only the level of development of a municipality, but also its contribution to the regional economy.
Sovetova [2013] considers the socioeconomic state of a municipality through the managerial prism and calls the level of this state managerial. Its assessment is made by analysing the values and dynamics of some indicators, which are then divided into three indicators: the socio-demographic sphere, the service sector and the urban economy, etc. For each indicator, the arithmetic mean is calculated, the indicators are assigned weighting coefficients by the expert method. Then, on the basis of the listed socioeconomic indicators, an integral assessment of the managerial state is carried out. This technique, as the author notes, provides for a comprehensive analysis of the quantitative and qualitative characteristics of the demographic situation development, the dynamics of business activity, the level and quality of life, as well as their prospects.
Ovchinnikova and Komarevtseva believe that there is a necessity "to create tools for assessing the effectiveness of local administrations, which is also due to the need for constant analysis of the socioeconomic situation in a municipality, a systematic study of growth points and shortcomings in the development of a territory, as well as the possibilities of a qualitative forecast of a municipality future state" [Ovchinnikova, Komarevtseva, 2014, p. 72]. Taking into account this necessity, the researchers set the goal of developing a composite indicator of the municipal development level identifying of the most significant potentials showing the functioning level of a territory.
This indicator is determined by a rapid assessment scale: less than 1 means unsatisfactory, 1 means satisfactory, more than 1 means sufficient. The higher the calculated indicator, the higher the efficiency of the municipal development.
To determine the weights of local indicators, data from the method of the information and analytical agency "Expert RA" are used:
• budget potential is 0.7;
• tax potential is 0.7;
• investment potential is 0.65;
• economic potential is 0.6;
• social potential is 0.6.
Myasnikova presented a system for analysing the dynamics of socioeconomic development of municipalities in the region, including methodological approaches to the formation of virtual homogeneous groups of municipalities, structural analysis, methods of local shares and building an "industrial matrix". Consistent application of these tools ensures the adjustment of sectoral guidelines for the strategic development of municipalities based on a multilateral assessment of structural dynamics. The author substantiates the selection of 16 indicators that characterise the production and social spheres of municipalities and they are the basis for identifying virtual clusters of these territories [Myasnikova, 2015].
Bukhvald and Voroshilov assess the trends in the socioeconomic development of municipalities in relation to the processes of local government reforms, using not only statistical data, but also the results of local government monitoring for the analysis, including a questionnaire survey of municipalities' heads. According to researchers, such an integrated approach is necessary due to the fact that the unresolved problems of local government functioning, the lack of economically motivated and most productive innovations in its institutional structure affect the stability of trends in the socioeconomic differentiation of territories [Bukhvald, Voroshilov, 2018, p. 137].
Novikova [2013] proposes a comprehensive assessment method based on an integral assessment of the socioeconomic development balance of a municipality. The indicators for this assessment are combined into three blocks: production, social and financial. The author evaluates the latter through the division of budget revenues into own, conditionally own and additional sources that regulate budget tension. The components of the balance index are measured in different units, so there is a necessity to bring them to a comparable form using the linear scaling method. Its essence lies in the defining reference points and displaying the values of each indicator in the range from 0 to 1 while maintaining all the proportions between partial indicators.
Shmidt and Denisenko [2009] introduced a method for assessing the differentiation of the socioeconomic development of municipalities, including indicators formed by functional blocks, a system of composite indicators, and a multidimensional grouping of municipalities. The main components of the assessment are production, municipal finance, the development of markets for goods and services, and the quality of life of the population. Next, an integral composite indicator is formed and its average value is calculated, allowing for which indicators of municipalities are compared in each component. Composite indicators are proposed to be used to regulate the financial flows of regional funds for financial support and municipal development.
Oreshnikov and Ataeva [2017] developed a method for inter-municipal comparison of the level of socioeconomic development of municipalities to make decisions about the possibility of their merger. The method is based on the use of social (life quality of the population), economic (potential for the development of the territory) and socioeconomic (average monthly wages and employment) indicators, as well as the indicator of budgetary security (financial capacity of the municipality to provide services and ensure the social obligations).
Thus, the analysis of various methods for assessing the socioeconomic development of municipalities shows that the method of assessment depends primarily on the goals. In one case, this may be building a rating, in another case, it may be determining the degree of differentiation in the development of municipalities, in the next one, it may be identifying trends in socioeconomic development, etc.
Kovaleva assessed the municipalities' competitiveness of the Sverdlovsk oblast. In this case, competitiveness is determined by the life quality of the population of the territory and its attractiveness for residents, entrepreneurs, investors and tourists. Due to this assessment, it is also possible to identify the prerequisites for the growth of municipalities and the threats to their development. In addition to assessing the competitiveness of municipalities by ranking, the scholar conducts a rating assessment of their socioeconomic potential and development dynamics, as well as a matrix rating assessment of the potential and dynamics of socioeconomic development together [Kovaleva, 2006].
The analysis of the municipalities development in the Sverdlovsk oblast is undertaken by Pobedin [2015], who groups municipalities into zones of economic development in terms of population concentration, the level of average monthly wages, the turnover of organisations, the volume of investments in fixed capital and the volume of retail trade. Moreover, he provides a comprehensive assessment of the investment potential of the region. The author identified Serov, Kachkanar-Verkhnesalda and Ekaterinburg zones as the most developed in the region.
Turgel and Pobedin [2007] studied the territorial differentiation of the socioeconomic development of municipalities in the Sverdlovsk oblast using the method of variation analysis. According to the authors, there are several methodological approaches to the analysis of territorial differentiation. The most common one of them is a simple comparison of available socioeconomic data; in addition, when assessing differentiation, the ranking method by individual indicators is quite often used.
In accordance with the method of variations analysis, the authors use a set of statistical indicators: maximum and minimum values, average, standard deviation, range, asymmetry and kurtosis coefficients. The adaptation of the method to the indicators of the municipalities' development in the Sverdlovsk oblast allows analysing the differentiation
of such indicators as wages and unemployment, retail trade turnover, industrial production, construction, paid services, investments in fixed capital, etc.
In addition to the analysis of indicators of the municipal development, there are methods for assessing the factors that affect its development, for example, the methods of strategic analysis proposed by Turgel and Karpov [2008]. These include PEST, SWOT, SNW and GAP analysis. PEST analyses environmental factors, SWOT focuses on opportunities, threats, strengths and weaknesses; SNW examines strengths, weaknesses, as well as neutral positions occupied by a municipality; GAP looks at the elements of the internal environment: strategy, diversification opportunities and operational activities.
Plyakin and Orekhova [2019] also propose a method for assessing the factor components of the economic potential and economic activity of municipalities based on the application of evolutionary genetic and spatial approaches. The authors identify labour, production and natural resource, institutional, organisational and informational components. Such structuring is justified from the standpoint of both assessing and handling the tasks of managing the sustainable development of municipalities.
As Rossel noted [2007], from 2004, the competitiveness potential of the municipality was assessed in the Sverdlovsk oblast. The applied method, approved by the Decree of the Government of the Sverdlovsk oblast as of October 21, 2004 no. 1001-PP, made it possible to evaluate the quantity and quality of the territory's resources, as well as to identify its strengths and weaknesses. According to the results obtained, the municipalities were rated by the level of economic potential and development dynamics. The calculation was done according to indicators characterising the state of the industrial and financial spheres of the territory, and relative indicators of the social sphere state. Municipalities were ranked according to each indicator included in the corresponding group, and then the rating for the group was determined as the arithmetic mean of their ranks.
Kovaleva and Oglobin [2006] noted that the rating assessment method of municipalities has become widespread in the Sverdlovsk oblast. It provides for an analysis of the economic potential level, determined on the basis of twelve indicators, and the dynamics of development, established using six pace indicators. The researchers also developed their own method for assessing the life quality of the population, which was tested in the specified region. Its distinguishing feature is the definition of indicators indices instead of simple ranking. This method implies calculating an integral index of the life quality of the population, which allows assessing the degree of territorial differentiation [Kovaleva, Ogloblin, 2006].
Ustinov [2012] proposes to use the method of comparative analysis to consider the development of single-industry municipalities. Its essence is in the formation of composite
indices, the values of which are added up as a result of summing up the ranks of municipalities by each indicator.
The foregoing makes it possible to conclude that most researchers assess the following aspects of the municipal development: balance, competitiveness, unevenness and territorial differentiation. However, the methods proposed by the researchers do not cover the variety of existing problems and do not allow resolving them. These methods, as a rule, are of a universal nature and do consider the characteristics of the type of municipality, and even more so the type of region in which economic space it is located.
This circumstance makes the formulation of own method for assessing the development of industrial municipalities increasingly relevant, taking into account the features and aspects of their functioning in economic space of a traditional industrial region. The properties of such a region we described earlier in our study [Dvoryadkina, Dzhalilov, 2021].
The method for assessing the development of industrial municipalities in economic space of a traditional industrial region
The method, created on the basis of the above prerequisites, is presented in the form of a conceptual scheme in Figure.
Let us characterise the blocks and stages of the proposed method.
The block for assessing the degree of industrial municipalities' participation in the processes of forming the saturation of the regional economic space has two stages of assessing indicators.
At the first stage, the dynamics of economic indicators of industrial municipalities is assessed. The selection of these indicators is based on the fact that economic space of these municipalities is "a set of economic agents distributed within a certain geographical space and interacting with each other within this geographical space by economic institutions" [Minakir, Demyanenko, 2014].
Accordingly, at this stage, indicators characterising the activities of economic agents at the stage of production (economic entities), distribution and consumption (households) are examined. Their list includes:
• population as a general basic indicator;
• average number of employees in organisations as a basic indicator characterising the population employment in a municipality;
• the indicator of "shipped goods of own production, performed works and services (excluding small businesses), the average number of employees of which exceeds 15 people". This indicator, as the indicator of the production stage, is used in evaluating the production dynamics in an industrial municipality;
Algorithm for implementing the method
Method for assessing the development of industrial municipalities in economic space of a traditional industrial region
• investments in fixed assets by organisations located in the municipality (excluding small businesses). This indicator is necessary to characterise the processes of expanded reproduction and it is also the indicator of the distribution stage;
• retail trade turnover (excluding small businesses) and the volume of paid services provided to the population, which characterises the stage of consumption in the municipal economy.
The second stage of our method provides for an assessment of the presence of industrial municipalities in economic space of a traditional industrial region. For this, the basic indicators for assessing the level of socioeconomic development are traditionally used:
• average number of employees of organisations;
• retail trade turnover (excluding small businesses);
• investments in fixed assets by organisations located in the municipality (excluding small businesses);
• "shipped goods of own production, performed works and services (excluding small businesses)";
• "shipped goods of own production only for the types of economic activities included in 'Manufacturing industries'".
Analysing the dynamics of indicators at this stage allows us to conclude whether the scale of the presence of industrial municipalities in the economic space of a region is growing or decreasing.
The block for assessing the degree of industrial municipalities' participation in the formation of the regions industrial potential includes the third stage of our method - the assessment of the industrial potential indicators. Since the object of the study is industrial municipalities located in economic space of a traditional industrial region, when selecting indicators at this stage, it is advisable to use the structural elements and key indicators proposed to assess the potential of a region's new industrialisation [Novikova, 2018] (taking into account their presence in municipal statistics).
The industrial potential is an integral part of the economic potential and it forms a significant part of the production potential in the territories with industrial specialisation. The production and investment potential is characterised by the following indicators:
• share of products shipped by manufacturing industries in the total volume of shipped products;
• production index for the types of economic activities included in "Manufacturing industries";
• investments in fixed assets per one employed in the economy;
• investments in fixed assets per capita.
The block for assessing the degree of industrial municipalities' participation in the formation of the municipal economic space of a region involves assessing the development processes of the municipal sector of industrial municipalities' economy (fourth stage). The presence of this stage in our method is due to the need for an analytical assessment in the municipal sphere, and not only in the industrial and economic ones.
The list of indicators used to achieve this goal includes:
• average number of employees in organisations of municipal ownership;
• wage fund of all employees in organisations of municipal ownership;
• average monthly wages of employees in organisations of municipal ownership;
• availability of fixed assets at the end of the year (gross book value) for commercial and non-commercial organisations of municipal ownership;
• investments in the fixed assets of organisations of municipal ownership;
• indicators of the budget of a municipality (budget revenues, non-tax revenues as indicators of the active use of municipal property, local budget expenditures).
The analysis of the listed indicators in dynamics makes it possible to identify trends and problems in the development of the municipal sector of economy, to compare them with the general trends in the development of a municipality in economic space of a traditional industrial region.
The block for assessing the degree of industrial municipalities' participation in the processes of increasing the functional complexity of a regions economic space includes the fifth stage of our method, which provides for an appropriate assessment.
We share the opinion of Evseeva and Ramenskaya that functional complexity is a factor in the stability of regional economy and a function of two arguments: "the variety of technologies implemented by regional companies and the localisation of companies who are carriers of system technologies (system integrators) in the region. The stability of a territory's economy is due to the possibility of embedding in a greater number of global technological chains, the manifestation of the diversification effect (a territory remains stable in conditions where the products of a particular technology are not demanded) and a decrease in the probability of path dependence" [Evseeva, Ramenskaya, 2020, p. 27; Evseeva, 2020]. Taking into account the results of the study obtained by Evseeva and Ramenskaya, we consider it appropriate with the help of this method to evaluate the contribution of industrial municipalities to the formation processes of functional complexity in economic space of a traditional industrial region.
Within the framework of the final block, the results obtained at the previous stages are interpreted, detailed analytical conclusions are made about the processes of economic development of industrial municipalities in economic space of a traditional industrial region, and a typology of industrial municipalities is built based on the criteria described above.
Conclusion
Summarising the above, we have made some main conclusions. The proposed method for assessing industrial municipalities in economic space of a traditional industrial region is conceptualised as follows.
Firstly, according to the territorial approach to the study of economic space, the method includes a block for assessing the scale of presence and economic dynamics of
industrial municipalities, which allows assessing the degree of their participation in saturating economic space of a traditional industrial region.
Secondly, in accordance with the resource concept of economic space, a block for assessing the industrial potential and participation of industrial municipalities in the processes of strengthening the functional complexity of economic space is introduced into the method. This creates a possibility to determine the degree of industrial municipalities' participation in industrial and technological spheres of economic space of a traditional industrial region.
Thirdly, based on the institutional approach to the study of economic space, the method contains a block for assessing the development processes of the municipal sector of industrial municipalities' economy, which allows assessing their participation in the development of municipal economic space of a traditional industrial region.
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Information about the authors
Elena B. Dvoryadkina, Dr. Sc. (Econ.), Prof., Prof. of Regional, Municipal Economics and Governance Dept., Ural State University of Economics, 62/45 8 Marta/Narodnoy Voli St., Ekaterinburg, 620144, Russia
Phone: +7 (343) 283-10-76, e-mail: dvoryadkina@usue.ru
Elvin V. Dzhalilov, Jr. Lecturer of Regional, Municipal Economics and Governance Dept., Ural State University of Economics, 62/45 8 Marta/Narodnoy Voli St., Ekaterinburg, 620144, Russia Phone: +7 (343) 283-10-76, e-mail: elvin.dzhalilov.94@mail.ru
Natalia A. Istomina, Dr. Sc. (Econ.), Associate Prof., Prof. of Finance, Money Circulation and Credit Dept., Ural State University of Economics, 62/45 8 Marta/Narodnoy Voli St., Ekaterinburg, 620144, Russia
Phone: +7 (343) 283-10-47, e-mail: istomina_na@usue.ru
© Dvoryadkina E. B., Dzhalilov E. V., Istomina N. A., 2022
